Selling internationally with Amazon FBA? A guest article by expert Micha Augstein
Those who operate their own webshop know how much manpower, time, and complex processes are involved. When taking the step into international markets, even greater challenges arise. Many sellers therefore choose to go through already established online marketplaces like eBay or Amazon and utilize services that go beyond just the virtual infrastructure. One such example is “Fulfillment by Amazon,” or FBA. Selling internationally is intended to become easier this way.
The service, which is also known as “Fulfillment by Amazon” in this country, offers many advantages: many new customers, growing consumer satisfaction, and easy processing. What is behind it? Does FBA really only offer advantages for shop operators and is the service suitable for every seller or brand? A clear no – this should be stated upfront.
About the Author
Micha Augstein is the founder and managing director of PARCEL.ONE, the logistics service provider for cross-border online trade. Since 2006, he has been investing in various logistics solutions and building companies. Previously, he worked in wholesale for various fashion brands.
Sellers must keep up with globalization.
Primarily, customers want to order from a shop that is trustworthy, delivers the desired products quickly, and is also affordable. Whether the delivery is from within the country or abroad is initially irrelevant. This applies even when sellers are selling internationally, whether through Amazon or other channels.
A development that holds huge potential but also presents significant challenges for online retailers. Expanding into new markets – beyond national borders – opens up new sales opportunities and is a must in times of increasing internationalization if one wants to survive and grow in the long term.
Especially for “newcomers” on the international stage, large online marketplaces like eBay or Amazon offer good visibility to customers from all over the world. Additionally, they provide attractive offers to facilitate entry into cross-border e-commerce. These points are in favor of Amazon and FBA, provided that selling internationally is fundamentally an option.
Fulfillment by Amazon – what is it, exactly?
The fundamental idea behind this offering is initially attractive for every online retailer: shop operators can easily automate their entire process by outsourcing it and refocusing on their core business and the actual development of their business. This means they hand over the order process, as well as packaging and shipping, returns management, and even customer service and invoicing – essentially everything that requires a lot of time, space, and manpower – to Amazon.
The barriers to using pan-European shipping are low: goods from any product category are sent to the logistics centers of the online giant, which are distributed around the world. The products are stored there and wait for their sale. Amazon answers customer inquiries in the respective local language. It’s an all-in-one package that, while the seller account incurs the corresponding sales fees, offers many advantages.
What you gain as an online retailer from FBA
First of all, such fulfillment makes it easier to enter online retail or new sales channels in general – it also provides a simple start into international business. The seller utilizes the established Amazon FBA infrastructure to sell internationally and does not have to deal with linguistic and cultural peculiarities, nor do they need to grapple with logistics providers and rates. Without significant personnel and time investment, the visibility of their products can be increased on a highly frequented marketplace that has a gigantic customer base worldwide – as evidenced by the increasing number of Prime customers in recent years.
This affluent target group – with over 100 million subscriptions worldwide (as of 2018) – not only spends significantly more time on Amazon but also has higher average shopping carts. A large portion of these customers filters their search directly for Prime-only offers, which promise shipping by Amazon and delivery times of just one to two days. Sellers who do not have this label do not even appear in the results list. This is also a reason why many sellers use “Fulfillment by Amazon.” Because then their product automatically receives a Prime label and is favored in placement for the Buy Box.
By the way, sellers also benefit from the usually smooth customer journey when selling internationally through Amazon FBA. Reliable, short delivery times – often within a day – and fast, uncomplicated returns management are now not just a nice touch for online customers, but rather the expected standard. Additionally, good reviews are an underestimated revenue driver and a compelling argument in acquiring new customers.
Additionally, the online giant is represented in numerous countries worldwide with a local platform, providing the opportunity to offer goods country-specifically under the same successful model.
Amazon.com generates six times more revenue than the German website.
In Germany, Amazon is the number one shopping platform, no doubt about it. However, the US market holds even greater potential. The online giant generates six times the revenue through amazon.com. Compared to the French, Italian, and Spanish websites, the American platform achieves a ten to twenty times higher traffic and significantly more orders.
Expanding into new sales markets through Amazon’s shop pages in Europe, but especially in the USA, offers enormous potential for revenue and new customers, not just for international “newbies.” Just as you don’t have to worry about the logistics of Amazon orders, delivering German goods to the FBA warehouse is also possible without much effort. Providers like Parcel.One handle logistics and shipping and are well acquainted with country-specific requirements.
This offers significant advantages for sellers: The various shipments destined for Europe and overseas are packed into a single cargo unit, sent to a consolidation address, and then the routing is handed over to the logistics expert. Parcel.One takes care of picking, adhering to customs regulations, and just-in-time delivery – sending the goods via trusted local shipping providers to the end customer or to Amazon warehouses. In this process, shipments from multiple customers are consolidated, making shipping cheaper through bulk discounts.
With FBA, sellers lose their marketing potential.
Despite all the advantages for shop operators who use Amazon FBA to sell internationally, this service is not the right choice for all sellers or brands.
Since storage costs are defined by duration and space, sellers should carefully consider whether it is worthwhile, especially for large, bulky products – particularly when they are not fast-moving goods. Additionally, if customer consultation is required, the sales process should be managed independently.
Sellers should also be aware that valuable marketing potential is wasted with FBA. Building a loyal customer base can only be achieved with your own webshop. Amazon customers typically perceive only Amazon as the seller, not the retailer behind it. Customers register the logo and design of the Amazon website during the ordering process, receive their products in Amazon-branded packaging, and communicate with Amazon customer service for questions or issues. If sellers, for example, distribute an eco-friendly product, they have no option to choose a consciously climate-neutral packaging. The seller’s hands are tied when it comes to shipping options and returns management.
There is another disadvantage for all sellers who sell internationally through Amazon FBA: The e-commerce giant accepts practically every returned product without closely inspecting it. This is driven by the online giant’s strong customer orientation and, of course, the desire to avoid an overwhelming organizational effort. Nevertheless, this can become quite costly for the seller, especially if high-quality but possibly only slightly damaged electronic goods are simply disposed of. If, for example, you have supply shortages and need your products from the Amazon warehouse, the goods must first be restocked. This costs time and money.
In simpler terms: Your online shop, your rules! With FBA, you relinquish control over inventory, returns management, shipping conditions, and the sales environment. Your product is presented directly next to competing products to the Amazon customer and is in direct price competition – not only against domestic products but also against foreign ones. The competition is therefore fierce.
“Fulfillment by Amazon” – to do or not to do?
Ultimately, “Fulfillment by Amazon” – despite some disadvantages – offers a good opportunity for sellers to tap into new markets, expand, and become more international. With Amazon FBA, sellers can sell across Europe and internationally. Without significant manpower, storage space, and time investment, you can present your brands to an international audience on a gigantic marketplace. Particularly, the American Amazon platform holds a large sales market with its six times larger revenue and high traffic.
The FBA program is unsuitable if you want to build a loyal customer base and improve customer relationships – additionally, as a seller, you relinquish marketing potential to the service provider. Therefore, it makes sense for many, but not all, sellers to sell internationally through Amazon FBA.
PARCEL.ONE is a logistics service provider specifically for cross-border online trade. The startup enables online retailers to significantly reduce their shipping costs for international deliveries by consolidating all shipments regardless of the destination country and selecting the ideal service provider for each individual shipment. Additionally, the effort on the seller’s side is greatly reduced, as PARCEL.ONE acts as the sole contractual partner for all markets – with a unified label and continuous tracking.
Image credits in the order of the images: © FrankBoston – stock.adobe.com / © Parcel.One / © Tierney – stock.adobe.com
